Vested right of appeal in penalty proceedings survives a statutory change that curtails jurisdiction

Penalty proceedings that began before the statutory curtailment of the authority's power preserved the assessee's vested right of appeal under the law then in force. Because the Income-tax Officer's satisfaction and initiation of proceedings for concealment occurred before 1 April 1976, the appellate remedy was not taken away by the later change in jurisdiction. A penalty order passed afterwards by the Inspecting Assistant Commissioner, who lacked jurisdiction under the amended scheme, could not stand and was liable to be cancelled.

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Issues: Whether the assessee's appeal against a penalty order passed by the Inspecting Assistant Commissioner under section 271(1)(c) of the Income-tax Act, 1961 was maintainable notwithstanding the statutory change with effect from 1 April 1976, and whether the penalty order was jurisdiction.

Analysis: The assessment order recording the Income-tax Officer's satisfaction about concealment was passed before the change in law, and penalty proceedings had already been initiated on that basis. On that footing, the lis for levy of penalty had commenced before the curtailment of jurisdiction. The right of appeal is a vested right accruing when proceedings commence, and it is governed by the law then in force unless taken away expressly or by necessary implication. As the relevant proceedings were pending when the law changed, the assessee's appellate right before the Tribunal survived, and the order imposing penalty by the Inspecting Assistant Commissioner, who lacked jurisdiction after the change, could not stand.

Conclusion: The penalty order was without jurisdiction and was liable to be cancelled; the assessee's main appeal succeeded.

Ratio Decidendi: Where penalty proceedings originate before a statutory change curtailing the authority's power, the assessee retains the vested right of appeal under the pre-existing law, and a penalty order passed thereafter by an lacking jurisdiction is invalid.

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